Toyota pullout: Long road comes to end for car making in Victoria

Toyota is the final car manufacturer to announce it will shut down production in Australia.

AAP: Joe Castro

It could be dark times ahead for thousands of workers and for Victoria, a state built on manufacturing.

"Workers are very upset and clearly disturbed about what is going to be a very difficult time for them in the future," Australian Manufacturing Workers Union (AMWU) official Steve Dargavel said outside carmaker Toyota following its decision to close in 2017.

"People will be very uncertain and concerned for their futures as manufacturing dries up in Victoria."

Those same words have been echoing for months around the Ford and Holden factories.

While the news of Toyota's closure is still being digested, the Geelong and Broadmeadows communities have had nine months to prepare for life when Ford stops making cars in Australia.

But Geelong has seen all this before.

The city which gave birth to Australian car manufacturing and will soon mourn its death, was once an industry leader of a different kind, looking to jump on board with the next big thing.

With the pending collapse of the Australian car manufacturing industry, the big question now is: what is that next big thing?

Legend has it that thanks to a misleading map in the 1850s, placing the Ballarat goldfields much closer to Melbourne than Geelong, the city on Corio Bay largely missed out on the benefits from the gold rush.

Instead it became known as the wool centre of the world, riding on the sheep's back all the way into the 20th Century.

Wool was the backbone of the Australian economy for more than a century and Geelong was front and centre with large wool stores lining the waterfront and woollen mills dotting the landscape.

It would be a long time before wool's ultimate demise, but early-on Geelong saw the need to diversify and add more strings to its bow.

By the 1920s, motor vehicles were being imported into Australia but the American car company Ford decided to make its Model T locally and leased premises in Geelong.

Around the same time, Adelaide car body maker Holden was ramping up its operations, joining forces with US carmaker General Motors.

Workers could do without this

Manufacturing and assembly plants along with parts makers and suppliers soon sprang up across the country as the industry's wheels started rolling.

The cars that came off the Australian production lines became part of our national identity - from the FJ and FX Holden to the Falcon GT-HO and Chrysler Valiant.

The Aussie ute, the panel van, even the much-maligned Leyland P76 and the Goggomobil (yes, the Dart) are all a part of the Australian manufacturing hall of fame.

Toyota appeared much later on the Australian scene, with the first Land Cruiser imports arriving for the Snowy Mountains hydro scheme in the late 50s and by 1963 Toyota vehicles were rolling out of a production plant in Port Melbourne.

Driving the economy

Around the big carmakers, grew a supply chain, toolmakers, research and development facilities and proving grounds with Victoria becoming the hub for the burgeoning industry.

The state is now responsible for the majority of vehicle assembly and automotive manufacturing employment with thousands of Victorians working in the car industry, either at the major car companies or the 150 component manufacturers.

The demise of the sector has been a death from a thousand cuts with numbers dwindling over the years.

In 2007, Ford announced it would close its Geelong engine plant and import engines from the US.

That decision was ultimately reversed but only served as a reprieve for the 600 local skilled workers and a precursor to the death of the entire industry.

In 1997, Mitsubishi made more than vehicles from its South Australian base. A little over a decade later, the car maker shut its doors.

It is not that Australians are not buying cars. In fact it is the opposite with a record 1,136,000 vehicles sold in Australia last year.

Toyota sold more cars last year (214,630) than its nearest competitors - Holden and Mazda combined.But while our motoring appetite continues to grow, the locally-made product has been swamped with 67 automotive brands competing in a relatively small market.

According to the Federal Chamber of Automotive Industries, the number of cars produced in Australia has dropped more than 35 per cent in the past six years, from 324,118 in 2008 when Mitsubishi ended local production, to 210,538 last year.

Large car sales are spiralling downwards, with the once majestic Ford Falcon falling spectacularly.

In just a decade, the Falcon has gone from more than 73,000 cars sold in 2003 to a mere 10,610 last year.

The final three car makers standing in the Australian market - Ford, Holden and now Toyota have all cited economies of scale as the major reasons from their decision to cease manufacturing.

Put simply, Australia does not make enough cars and certainly does not export nearly enough to justify investments and upgrades.

The Federal Government Productivity Commission inquiry into the automotive industry released its preliminary findings last month, finding all vehicle manufacturers in Australia were producing well below the 200,000 to 300,000 vehicles an assembly plant would need to pump out in order to be cost competitive.

Despite making record profits in North America and Asia in 2013, Ford made a business decision on its Australian operations and will cut local production by one third in June, costing 300 jobs.

It has committed to maintaining 1,500 Australian jobs even after 2016, with engineering, product development and head office positions remaining.

The company intends to continue making vehicles in Australia until October 2016 but will "monitor the situation" of its sliding sales, leading to fears it may pull out early.

While Mitsubishi and Ford's demise led the way for the others to follow suit, it is the fall of the final, and most successful car maker in Toyota which will hit hardest and could lead to the whole ecosystem collapsing in a domino effect as parts makers close, drying up supply.

Map: World motor vehicle production by country, first six months of 2013. Source: OICA